Procurement Transformation That Truly Transforms (& FREE Tools To Do It))

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Author: Adam Stennett

Today I’m sharing something special with you.

It’s the procurement analysis toolkit I’ve built myself; the toolkit I use every day in my work as a procurement consultant.

And I’m giving it to you for free.

That’s right – free.

Sounds like a sweet deal, right?

Why would I do such a thing?

I have two reasons.

First, I love being a procurement consultant because I love helping people.

I get a lot of happiness helping clients transform their businesses. I love the satisfaction that comes from fixing problems that have been upsetting someone for months or years – the problems no one else could fix. That’s what my toolkit does.

So if I can help a few more people like you, simply by publishing a few words, I’m happy to do it.

(Just be sure to let me know about your successes, which leads me to my next point…)

Second, I wanna know what you think.

Is this something that would work for your organisation? If my toolkit resonates for you, let me know! And if not, let me know that too!

I’m constantly refining and rebuilding my toolkit based on working with procurement professionals just like you, so if you have an opinion, an insight or a suggested improvement, please share it with me.

Adam’s big money procurement transformation strategy – for FREE

Procurement transformation is really fifty-fifty art and science.

If you have too much structure and too much focus on internal pain-points, you can miss the opportunities that come from thinking completely outside the existing arrangements.

On the other hand, if you only focus on reinventing the wheel, you can fail to build upon the parts of your existing procurement strategy that are actually working.

My toolkit is the processes I follow to deliver procurement transformation that truly transforms. The processes that balance the art and science of procurement to deliver real results.

They’re divided into four distinct steps, which are outlined below.

Step 1 – Start with the now (how do things currently work?)

The best way to do this is to talk to your procurement team. Get out a pen and paper and draw the existing process the people you talk to describe.

What you’re likely to find is that there are major discrepancies in understanding across the team. For example, places where one person thinks something works like “x” but the other thinks it looks like “y”. These are places that may require attention later.

Similarly, if people miss out major steps from the process, this can suggest specific areas that need attention. People naturally gravitate to talking about what they know, so if parts of the process you’d expect to see aren’t there, or if they receive little treatment, add a “dig more” note for later. These underserved areas may be key places your existing procurement strategy requires transformation.

Step 2 – Begin aligning values (what’s important?)

This one always comes as a bit of a shock to some people, so hold onto your hats…

Good procurement isn’t just about just about getting the cheapest price. Price and cost savings may be one of your metrics, but there are others you need to consider.

When I speak to a new client, I want to discover what their strategic objectives are.

And no, I don’t mean the flowery, fifteen page, feel-good internal procurement strategy document.

I want to know: Fundamentally, what does success look like for your organisation?

Is it housing more homeless people? Is it improving suicide prevention? Is it increasing revenue from your substantial asset base? It doesn’t matter what the answer is – it’s vital to understand what success “looks” like to your organisation.

So, how does knowing this impact your analysis? Let me use a real example from a few months ago.

This particular client’s core motivator was revenue and profit. They also had goals around non-financial metrics including safety and environmental impact, but fundamentally, revenue and profit was what success “looked” like to them.

Rather than simply looking for places to save costs, I started looking at how the whole value chain worked. Once I understood that, I was able to look at how the business operated and understand what goods and services were being bought to support their revenue generation. This information was important for the next step.

Step 3 – Come up with a thesis (what needs to change?)

You’ve figured out what procurement currently looks like in your organisation and you’ve put that in the context of your organisation’s goals.

Now it’s time to start putting 2 and 2 together and getting 5.

Arrange your notes to ensure you’ve covered the following areas:

  • Any – and all – pain-points you’ve identified from your discussions
  • Any opportunities you’ve identified based on your experience (this can often add the most value, as your personal experience and knowledge is unique)
  • Any steps in the process that currently support or align with your organisation’s goals
  • Any steps in the process that don’t support or align with your organisation’s goals

Once you have all these on a page, you should start to see patterns and themes appearing.

And once you’ve reached a point where you feel like you can articulate them clearly, it’s time to find the most experienced person who’s familiar with the organisation (and is a friendly resource) and start a conversation.

Tell them your theories. Tell them what you’ve seen. Get their opinion on what’s going on.

Usually these resources will either confirm your direction or totally shoot it down with contrary ideas. In either case, you’ve learned something valuable. If they shoot you down, start again. But most of the time, you’ll find that 70% of what you’ve come up with will fly, and the other 30% is either wrong or based on incomplete information, which simply offers an opportunity to change or optimise your position before you move forward.

You might think that now you’ve validated your theory, it’s time to start fixing everything, right?

WRONG.

The next concept is one that many procurement consultants miss, so I want to harp on this a bit.

Just because it’s broke, doesn’t mean it’s worth fixing.

You need to focus on the things that will add the most value – and you need to measure that value based on your organisation’s objectives.

In fact, you’re going to prioritise potential changes based on how addressing different pain-points affect the achievement of these key goals.

We don’t operate in a perfect world. The best outcome you can realistically achieve is to allocate your time to the highest value outcomes.

And this is critical.

A lot of organisations have had an experience where consultants came through, highlighted every single pain-point, then fed them back to the executive to act upon as if every change was equally material.

Unfortunately, this does a great disservice both to the work the consultant put in and to the organisation. The organisation spends months or years working their way through an inexhaustible list and either gives up, wastes time and money seeking out a new consultant and regime because it’s all too hard, or gets almost nowhere because there’s simply too much to do.

Instead of taking this approach, you’re going to use your prioritised list to narrow down to four or five essential things that need to be done, now.

This is the greatest secret to procurement transformation that truly transforms.

For most organisations, two or three quick and dirty fixes that will be up and running in six months, and that will fix 80% of the problems, are much more valuable than 30 or 40 initiatives that will fix 99% of the problems, but in ten years.

This is particularly true of system implementations.

Think a new system is a silver bullet? Then do it in a smaller way, and quickly. Test it and see. I can’t count the number of times I’ve seen organisations leveraged by system vendors, only to get to the “go live” stage and realise that all they did was systemise a broken process.

Now remember – nothing stops you coming back once you’ve had some success with your first two or three fixes and implementing further change. But there needs to be a realistic understanding that you have a limited number of resources, so you need to put your time into the best stuff, in the order that makes the most sense.

And remember, whatever you’re gonna do, do it fast, and do it now.

Step 4 – Implement intelligently (how do we make this work?)

Now you run around and tell everyone to change, right?

Well, not quite.

The real art in the implementation phase is value alignment again, but this time with your people.

Implementing change isn’t about being sneaky or tricking people or telling them what to do.

This is a part of the picture most consultants and organisations totally forget or misunderstand.

Just because you’ve done all this work on figuring out the problems and the solutions doesn’t mean everyone will do whatever you say.

Broadly speaking, there are two main archetypes of people that you’ll deal with at this stage:

  • Receptive – they understand your proposed changes and feel the pain-points you’ve identified. This is the easiest place to deliver procurement change, because when you’re people the pain, and you’re fixing it, you’re on a one-way trip to happy town.
  • Unreceptive / Agitated – they feel like they’re in direct opposition to your proposals. They may be change-fatigued or they may not “buy in” to what you’re presenting.

Now the Unreceptive / Agitated archetype is most common, but don’t get discouraged. Because these are the situations with the most opportunity.

You’ve used your brain to identify pain-points and solutions, but now you need to use your heart to figure out how to align the interests of the people driving change (including you) with the people on the ground who take care of everything day to day.

There’s always a win-win somewhere. You just have to find it. (Usually by following a similar process to Step 2.)

Once you’ve identified your win-win, you need to build on it with a change management strategy. This is about communicating your win-win, getting people to actually listen to you and “buy in” to the changes. It’s about showing them how fixing a pain-point for your business will also deliver a strategic objective that aligns with their values. Often, there are two sides to any procurement issue you define. The key is to understand both sides, then come up with a solution that makes all parties happy (which may involve compromise).

Voila!

You’ve just run through my procurement toolkit, compressing what is usually a six month transformation into a few minutes of reading.

Like what you’ve read?

This is an excerpt from my new e-book, Beyond category management – new thinking in procurement teams, which is available here.

Like I said at the beginning, whether you love what you’ve read or hate it, please drop me a line here ( adam.stennett@stenettconsulting.com.au)

Thanks for reading!

Adam Stennett, Stennett Consulting

Who is Adam Stennett?
Adam Stennett is a strategy specialist who loves to push the boundaries in organisations to find the most effective ways to help teams develop and learn. If your procurement or other training needs an overhaul, or if you simply want to discuss appropriate strategies for taking your training to the next level, contact Adam and his team at Stennett Consulting today. Email enquiries@stennettconsulting.com.au to get in touch.

 

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